Photo: Robert Trachtenberg
Hashing out monetary matters may not make for romantic pillow talk, but a little financial planning can do a lot for your love life down the line. Here are a few pointers to help you stay smart when following your heart:
You must talk money before your relationship becomes serious—a person's financial habits are an incredible insight into his values and ethics. That doesn't mean a lousy credit score is a reason to break up, but if you find that your new love interest doesn't handle money responsibly, you have to question what else he isn't going to be upright about. If you're the one with the issues, be honest about your shortcomings. A good relationship is one in which each party helps the other make better choices—and you and your beau might be able to help each other become smarter about money.
Meet in the Middle
Whether you are newly engaged or suddenly find a long-term relationship challenged by a financial setback, support each other. Retreating to your corners does not help. Nor does finger-pointing; blame doesn't help your balance sheet. To address any money problem, you need to work together to come up with a game plan.
Consider Yourselves Equals
Who makes what is irrelevant. Do you hear me, stay-at-home moms? The size of your paycheck does not determine your role in the family finances. Respect each other as equal partners, with an equal say in money management.
Put It in Writing
I know there's nothing sexy about legal forms. But ensuring that you have the correct documents in place to safeguard you and your assets is a must. A prenuptial agreement will clearly delineate what is solely yours before marriage, meaning you will be protected if you divorce. For those contemplating a second marriage, the only way to protect the assets you bring to the table—especially if you want them to go to children from a prior marriage—is to create a legal trust. That document will spell out what portion of your personal assets will pass to your children, rather than to your new spouse.
Fools Rush In
Debts you had prior to marriage are yours alone—unless you actively merge them. When you wed, don't automatically rush to combine everything. You can help each other out by chipping away at your loans without becoming officially responsible for each other's.
Divide and Conquer
Here's how I suggest every cohabiting couple organize their cash flow: Create three accounts—one for you, one for your partner, and one joint fund. Once you've determined the total cost of your shared living expenses, both of you should contribute your portion of these costs to the joint account each month, based on your share of household income. (For example, if you make $60,000 and your partner makes $40,000, you're responsible for 60 percent of household expenses.) Whatever money doesn't go toward these costs stays in the individual accounts, to be used at each person's discretion.
Every woman also needs one credit card in her name only. If you become divorced or widowed, an individual credit history will enable you to get a loan and open utility accounts without leaving a deposit, and may even help you land a job (some employers check applicants' credit during the hiring process).
Ties That Bind
After you marry, every asset either of you acquires is jointly held. That's why you both need to be in sync on your long-term financial goals, from paying off the mortgage to putting away for retirement. Ideally, you should talk about all this before you wed. If you don't, you can end up deeply frustrated and financially spent. Discussing money with the man you hope to spend the rest of your life with doesn't mean you don't love him. It means you love him and yourself.
Don't Hide Your Head in the Sand
A lot of women fall into the habit of letting their partner handle the money. If you are one of those women, that's not your spouse's fault; it's yours. Your husband may be doing a fabulous job with your money—that's not the point. You need to understand the family finances and weigh in on all decisions. The fact that women tend to live longer than men means they may need to rely on the money longer and will also find themselves managing it at some point. The longer you wait to engage, the bigger the surprises you may find down the line.
Next: How to manage a financially controlling spouse
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Suze Orman's most recent book is Suze Orman's Action Plan: New Rules for New Times (Spiegel & Grau).
From the February 2011 issue of O, The Oprah Magazine